Global Liquidity Watch: Weekly Update

Global Liquidity Continues To Slip Lower

Global liquidity continues to slip lower, according to measures derived from the weekly balance sheets of the major Central Banks and collateral values. Digging deeper into the data, there has been some improvement in Central Bank liquidity growth thanks largely to the PBoC, bond volatility has ebbed, and the US dollar has faltered again. These are liquidity-positive. But ongoing QT among other major Central Banks – including the Fed despite recent better numbers and weakening bond markets are liquidity-negative. A continued slide in liquidity through the rest of Q2 will put pressure on risk assets and liquidity-sensitive cryptocurrencies in Q3. For now, risk asset markets and cryptocurrencies are being supported by the Q1 liquidity upturn, which saw global liquidity expand by over US$5tr.